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Ask a Car Nut - Part Deux

Discussion in 'Off-Topic' started by Formaldehyde, Jul 13, 2012.

  1. hobbsyoyo

    hobbsyoyo Warlord

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    To make sure I'm reading you correctly - a new car from a dealership doesn't need a mechanic inspection unless marked 'as is'?

    Thanks
     
  2. Formaldehyde

    Formaldehyde Both Fair And Balanced

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    It depends on the dealership and their used car warranty program. Some dealers even have two year extended warranties for used cars that have passed their own extensive checks. But if it is marked "as is" you should be a lot more careful.

    Check out my previous post. I apparently added a lot to it after you posted this response.

    What new cars are you considering?
     
  3. hobbsyoyo

    hobbsyoyo Warlord

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    Ok thanks again. I appreciate the advice.
     
  4. hobbsyoyo

    hobbsyoyo Warlord

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    Ok cool. I'll post here when I have more specifics. At this point, we've nearly got to buy a car outright and we're steadily saving up. I have thought about used cars and haven't ruled them out entirely but I am also not the only one making the buying decision. We aren't so much worried about getting screwed over like last time (which was half my fault for not knowing literally anything - I had a license for all of 2 weeks then and half the shady mechanics fault) but more worried about having to put money into maintenance on a used car whereas a new car *should* have less issues and/or a warranty of some sort.

    Which reminds me I inadvertently lied a few posts back when I said I had never bought a car before. It's been so long and I had that car so briefly that I forgot about it!
     
  5. Zelig

    Zelig Beep Boop

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    Yes, that's what I was saying.

    If you're buying a new car it won't be marked "as is", it will have a warranty and doesn't need an inspection.

    There's really not a whole lot you can do to move the price on new cars: look up what the lowest price has been in the past year due to manufacturer incentives, wait for that to roll around again, get the lowest price from all nearby dealerships. From there you can get more value in extras (accessories, credit for service, etc.) than you can in cash saved. If America has something like unhaggle you could look for that.

    Depreciation on a new car will almost certainly cost you more than maintenance on a used car.
     
  6. hobbsyoyo

    hobbsyoyo Warlord

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    And if we are looking to keep the car for a very long-term period, do you reckon that changes much? I could be wrong, but if I have a warranty and/or very few maintenance issues in the next 5 years, then it's worth it to me since it will likely be a decade before I look to trade in this car. By which point the difference in depreciation between the car I bought new and the (newish) car I bought used shouldn't be significant. At that point, the maintenance cost would likely also be similar, but again, I (could) save on that during the first couple of years of a new car with a warranty and/or few maintenance issues.
     
  7. Zelig

    Zelig Beep Boop

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    Well it depends on various factors.

    Maintenance costs are significant after five years, and don't dramatically increase in the long-term.

    http://www.desrosiers.ca/pdfs/2002/2002-12.pdf

    You can see that combining all costs, years 1-5 are more expensive per 1000 km than any subsequent year. Depreciation on a new car will cost you on average about 5x more than repairs on a 15 year old car will.

    In ten years the depreciation between a new car and a one-year old car will be significant, because they'll both be worth very little after ten years, but they'll have lost the biggest amount of their value in the first year of ownership.
     
  8. hobbsyoyo

    hobbsyoyo Warlord

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    In the accounting sense, yes, depreciation will bite me. As for the 'cash in my account' side of the ledger, much less so. Again, I don't plan on trading it in for a decade so the depreciation it will suffer in the first year has little bearing on me. However, if a good warranty (and a car) can save me significant maintenance, then that does have quite a bearing on me.
     
  9. Zelig

    Zelig Beep Boop

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    How are those different things? The depreciation in the first year only affects you if you buy a new car, directly at the time of purchase. If you buy a year-old car it's a cost you never pay. New car average $24,756, one year old car averages $20,288. On purchase you save $4468 with the one year old car. (Worth close to double this after ten years if you invest the money.)

    After ten years in either car, you've driven the same years 1-10 in either car, but the new car gets year 0 and the year-old car gets year 11. New car costs in year 0 for 20k of driving is $8,314, year-old car costs in year 11 for 20k of driving is $3761.6. You save $4552.4 over the ten year period.
     
  10. hobbsyoyo

    hobbsyoyo Warlord

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    That makes sense. Thanks.
     
  11. Formaldehyde

    Formaldehyde Both Fair And Balanced

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    I seriously doubt you will keep the same car for 10 years if you are graduating with an engineering degree.

    Speaking of which, wouldn't it be more sensible to buy a dependable low maintenance used car given that you are still in college?
     
  12. Borachio

    Borachio Way past lunacy

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    I know someone who buys really cheap cars. (In the UK cars don't typically dip much below the £750 mark.) He keeps them for up to a year, doesn't pay any maintenance and scraps them after that. It works out a lot cheaper than buying a brand new car and keeping it for 10 years. At least, that's the theory.

    He also drives like a maniac.
     
  13. Zelig

    Zelig Beep Boop

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    I have an engineering-like degree and employment and plan on keeping my car for roughly 10 years. (Depending on when it rusts apart, and how soon I can get a V60 with flywheels.)
     
  14. Formaldehyde

    Formaldehyde Both Fair And Balanced

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    Which car is that? And let me know how that works out for you.
     
  15. Zelig

    Zelig Beep Boop

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    Fiesta, ten years of ownership will put it somewhere around 210k km.
     
  16. hobbsyoyo

    hobbsyoyo Warlord

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    I see no need to replace the new car will buy soon. Contingencies happen, of course, but it's much more likely I'll buy a second new car before I trade in this first one.

    My wife isn't in college (she is gainfully employed) and I am 1 year from graduation. We've been saving for years and are a few months away from buying this yet. And it's not like we're going for a high-end luxury car, just something cheap and dependable. Our one 'luxury' I guess would be that we do prefer a new car instead of used but are in no way splurging.
     
  17. Formaldehyde

    Formaldehyde Both Fair And Balanced

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    I guess anything is possible. I had to go to Autotrader in Britain to find any 10+ year old Fiestas. Most of them can be bought for well under $500, but there are a few with less than 70K miles that go for more.

    If she has a full time job that's a bit different. But I'd still think twice about it. You can buy a car that is not cheap and still dependable for much less. But there will be the occasional maintenance costs.
     
  18. Zelig

    Zelig Beep Boop

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    That's because they weren't sold in North America between 1980 and 2010. ;)

    I expect mine to be essentially worthless when I'm done with it, $500 is the most I've ever sold a car for.
     
  19. Formaldehyde

    Formaldehyde Both Fair And Balanced

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    That means you would be far better off selling it much sooner. You will get more money for it, and you won't have nearly as many repair bills.
     
  20. Zelig

    Zelig Beep Boop

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    How could that possibly be the case? Total costs (maintenance + insurance + depreciation) is pretty much always cheaper (or at least not more expensive) with an older car, so you always come out ahead financially by driving a given car into the ground.
     

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